In the world of government contracting, most contractors consider protests in the context of bid, size, or status protests. As we’ve discussed before, however, there is another highly useful tool in the toolbox for contractors: the NAICS code appeal. When leveraged correctly, the NAICS code appeal can be quite effective for small businesses in securing a favorable outcome. That said, a recent SBA OHA decision shows that the burden of proof on a NAICS code protester requires some potentially heavy lifting. Today we’re diving into that decision to help clarify what it takes to successfully appeal the NAICS code designation in a federal solicitation, and thereby help determine whether this particular approach is the right one for your business.
First, a quick crash course on NAICS codes and the appeal process. The North American Industry Classification System (NAICS) establishes standards for classifying businesses and industries in the U.S., Canada, and Mexico. Six-digit codes are assigned to each industry by the US Census Bureau to aid in classification for economic purposes, and SBA assigns different size standards to each code based on receipt size (aka, dollars) or number of employees. The NAICS manual lays out the system for assigning the codes, and SBA maintains a table of all the size standards assigned to the codes.
If a contractor is adversely affected by what they believe to be an incorrect NAICS code designation on a federal solicitation, they can appeal that designation to OHA. 13 C.F.R. § 121.1103. Such an appeal must be filed within 10 calendar days of the issuance of the solicitation (or an amendment affecting the NAICS code). Id. at (b)(1); 13 C.F.R. § 134.304(b). From a strategic standpoint, these appeals are generally filed by a contractor seeking a more favorable NAICS code designation, likely to help it meet the size standard and thus bid as a small business (or restrict the pool of offerors and thus limit potential competition). For further information on NAICS code appeals, head over to our NAICS Code Appeal entry in our Why File series, or simply sort our posts by NAICS Code Appeals.
So, based on those regulations, it’s as simple as filing a timely appeal and then arguing that a different NAICS code would be more appropriate to OHA, right? Not so fast. 13 C.F.R. § 134.314 sets the standard of review and burden of proof for NAICS code appeals, and states:
The standard of review is whether the size determination or NAICS code designation was based on clear error of fact or law. The appellant has the burden of proof, by a preponderance of the evidence, in both size and ANICS code appeals.
13 C.F.R. § 134.314. In a recent OHA decision, the appellant ran headlong into this standard of review, failing to meet their burden of proof and ultimately failing to secure the outcome they’d hoped for.
In NAICS Appeal of: Tribal Providers, SBA No. NAICS-6378 (Feb. 4, 2026), the solicitation at issue was issued by the VA for teleradiology services and assigned NAICS code 621512, Diagnostic Imaging Centers, with a corresponding $19 million annual receipts size standard. The appellant, Tribal Providers, argued that the CO had clearly erred in this designation, insisting that the appropriate NAICS code was 621111, Offices of Physicians, with a corresponding $16 million annual receipts size standard. Given the attempted reduction in size standard, it is likely that their ultimate strategic goal was the shrinking of the offeror pool.
Tribal Providers argued that the procurement was for the performance of professional physician services, particularly radiological interpretations, emphasizing that the contractor was required to provide the interpretive services off-site, while the VA would utilize its own equipment and capture the images itself. The appellant argued that the value in the contract was the interpretation services, not the imaging center operations—in other words, the professional practice of medicine by radiologists, not the operation of diagnostic imaging facilities. Thus, the appellant argued, NAICS code 621111 was more appropriate, as it “covers establishments of medical practitioners primarily engaged in the independent practice of general or specialized medicine or surgery operating in their own offices or in others’ facilities.” NAICS code 621512, by contrast, is for “diagnostic imaging centers primarily engaged in producing images of the patient, such as CT-scan centers, radiological laboratories, MRI centers, and ultrasound imaging centers.”
These arguments seem reasonable enough at first. However, OHA was unpersuaded. Among other things, OHA emphasized “it is the character of the services themselves, not the location of their performance, which is decisive in making a NAICS code designation.” OHA further pointed out that the NAICS manual described code 621512 as covering “the production of images of patients” (emphasis added). Under the terms of the solicitation, the contractor’s physician’s would add important annotations to the images provided by the VA, thereby contributing to the production of the images. Additionally, “the requirement that the Contractor handle the electronic communication between VA and the radiologists puts the work to be performed here beyond that of physician’s offices, and in the category of the imaging centers covered by NAICS code 621512.”
OHA held that Tribal Providers had failed to demonstrate that NAICS code 621512 was clearly incorrect. They thus had not met the burden of proof established in 13 C.F.R. § 134.314, as they had not shown that the CO had “clearly erred” in selecting that code. OHA did not consider the code proposed by Tribal Providers, stating “it is well-settled that ‘OHA will not assign a different NAICS code to a procurement unless the CO’s choice of NAICS code is shown to be clearly erroneous.”
As we’ve pointed out before, filing a NAICS code appeal can be quite effective, as sometimes the agency will simply amend the solicitation based on the appeal before it can even be heard, thereby achieving the desired outcome for the contractor relatively quickly. However, should the agency not be quite so accommodating and let the appeal get to OHA, the contractor had better be prepared to show that the CO made a clear error in selecting the NAICS code they did. Simply proposing that another code might be more appropriate will not move OHA to reassign the code. Indeed, OHA won’t even consider an alternative code unless the protester carries that initial task of proving the CO made an obvious error.
This isn’t always an insurmountable task. COs do indeed make clear errors in judgment, and in such a case a NAICS code appeal can indeed be quite an effective tool. As an oft-forgotten protest avenue, it’s important to remember that this route can be relatively quick and easy. However, there still must be substance to the appeal. Even if it’s true that another NAICS code might be a better fit, any hopeful protester will still have to clear the initial hurdle with hard evidence and a convincing argument.
So, if you find yourself looking at a new solicitation and feeling that the NAICS code designation is inappropriate, don’t forget that you can absolutely challenge it, and that doing so may be quite beneficial for your business. Just don’t also forget that it’s not enough to propose a better alternative. Every case is unique and there are always fun little hidden legal nuances, so be sure to reach out to your friendly neighborhood federal contracting attorney for advice!
Editor’s Note: Special thanks to our wonderful legal clerk Will Orlowski for putting together this blog post.
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